The Future of Large UX Design Firms

A New Clientele

“Looking at this question more broadly, it seems like the issue really is: Will more design work end up being done in house rather than by external consultants?” responds Cory. “Seeing the glass half full—as someone who has been a lifetime consultant—while it’s certainly true that some organizations are developing greater in-house UX capabilities, other organizations are now realizing for the first time how important user experience really is. I believe organizations that have less maturity in integrating User Experience into their standard product development process will replace much of the work we've lost from client companies that have brought User Experience in house.”

“There will always be a need for the large digital agencies because digital products will be a small part of their overall campaigns or projects,” answers Eryk. “Large digital agencies will look to small and mid-sized design shops that specialize in a specific type of product, application, or industry to deliver this piece of their overall campaign. In-house UX design teams often do not create something from scratch, but rather maintain and improve it. So in-house UX teams could pick up work at the point where the agencies stop.”

“Another aspect is expertise in particular product domains and market niches,” replies Yury. “In most cases, client companies have a high level of confidence in their own domain knowledge, but an agency needs additional time—and budget—to get on track. But even once they get up to speed, an agency’s domain knowledge is not usually as deep. Does it make sense for a product company to put an agency team like this on an important project? Maybe. But more and more product companies agree that, to achieve truly groundbreaking results, they need to hire designers who are deeply familiar with their target market and audience. And developing and keeping this expertise in-house is a more strategic approach.

“How to deal with this situation? We need to decrease the transactional costs of production workflows—the endless Ping-Pong of deliverables and process steps back and forth between a client and an agency. Otherwise, the process takes too much time and effort, delaying a product’s launch and eroding the product vision. We have to forget about such assembly-line approaches and move to dynamic teamwork, with fewer managers and communications going through them, more direct communications and greater trust between professionals in multiple disciplines, and greater power and decision-making authority for those professionals.

“How can we achieve such client relationships?” asks Yury. “To be honest, I don’t know yet. But this new approach will require super-tight collaboration instead of taking the job to the agency’s office and telling the client, ‘We’ll get back to you with our deliverables.’ Instead, an agency team could work at the client’s office. An agency could grow a designer with the necessary expertise within their firm, then sell that designer’s time to their client’s team. An agency could teach an inexperienced client and co-design a product with them. Such high levels of engagement increase trust, speed, and quality. An agency could give even an experienced client UX competencies that they’re lacking. This would give the agency the ability really to influence a product. Unfortunately, it’s painful when a client changes a designer’s ideas for the worse once a project is finished, as often happens. Paul Boag has written about the benefits of co-designing with clients in ‘Designing with Your Clients.’

“The ThoughtBot agency works together with their clients in an agile way, selling iterations one by one, as they describe in their Playbook. If, by the end of an iteration, the result is good enough to proceed with a project, they sign a contract for another iteration. Others like EPAM Systems are trying to take their responsibility for products further, working on business models and design details collaboratively with their clients.”

A New Focus

“I don’t see a huge decline in the use of design agencies coming,” demurs Baruch, “for several reasons:

1. The development of internal UX organizations is not as strong as the anecdotal evidence suggests.
2. Internal organizational politics and usage patterns for UX resources prevent the engagement of internal UX groups on every project that needs them.
3. The eventual institutionalization of such internal UX groups will not work for all projects. External agencies will always provide the ability to provide a green-field approach.

“For all of these reasons, while the focus of design agencies may shift, their usage will still be necessary.”

Speed to Market

“In modern product development, speed to market is constantly increasing,” answers Yury. “Competition is fierce. It seems that every market niche is packed with competitors, and product teams must push the tempo of their work to keep up. This necessity makes old assembly-line ways of working obsolete. The problem is that, traditionally, this has been the way most design agencies typically work with their clients.

“I’ve been on both sides of client work—at the small UX design agency UI Modeling and as a consultant in the large product company Mail.Ru Group. So I’ve encountered this problem twice. I believe that the conflict I’ve described is baked into the business models of design agencies. An agency has to give a client a predictable outcome. They usually achieve this through a standardized work process. Diverging from their process causes additional expenses for the agency, decreasing their profit from a project. It also disrupts project schedules and scope-of-work obligations.

“But product companies live in another world. They can’t give an agency a detailed requirements specification because a successful product launch means endless experiments with the product concept, business model, and target audience. Initially, they have only a more or less detailed hypothesis about the product they need to create. They test their hypothesis and refine it through trial and error throughout the product design and development cycle. This always leads to deviations from the original requirements that are scary to agencies. Moreover, it’s impossible to specify all requirements. Plus, many get discarded or added once a project has started.

“There might be three ways to solve this problem:

1. The agency could either ask for additional budget or request that the scope of the project be limited. This option is tricky for the product company—with so many deviations from the original plan, budgeting can be unpredictable.
2. The agency could insist on following the original project plan, but there’s no way this option would ever work. The need is never just to launch something. A product must actually solve the right problem for the right market for the right audience. And the search for this solution can be a journey with many twists and turns.
3. The agency could reduce its own profits. This could be detrimental to the long-term viability of the agency.

“Even worse, an agency’s and a product company’s teams work differently and, often, at different locations,” continues Yuri. “Sure, there are lots of meetings, workshops, and discussions happening. But the agency lacks the internal dynamics of a product company, including endless mini-brainstorms, project discussions, and accidental chat during lunch or beer busts. This makes the product company’s idea exchange supersonic fast and builds strong trust and team spirit. A lot of meetings are spontaneous, so it’s impossible to have the agency team participate in every one. The result is that they gradually lose context.

“A formal work process can be a great tool. But if you can’t follow it on a real project or the process doesn’t consistently lead to successful products, what’s the point? That’s why Mail.Ru has stopped outsourcing product-defining tasks. We define products internally, then ask agencies to work on small, specific tasks such as illustrations, icons, low-priority promotional sites, and add-on apps. These are jobs that we rarely need to do, so our internal UX team can’t build a strong competency in identity or type design, for example.

“This conflict exists because of the ways most product companies and agencies do business. For consultancies, predictability is important. They sell a guaranteed result to a client that they can achieve only by formalizing their efforts. But for product companies, speed is critical, so they build their work processes around that need. Plus, small startups have limited budgets for hiring, so they have to get work done cheaply.”

Time to Changes the Rules?

“Perhaps the time has come for companies that develop products and services and the UX consultants who work for them to move away from approaches that have never served either well,” responds Pabini. “It’s not only design agencies that seek greater predictability. Many product companies endeavor to control their costs before a UX design project has even begun by sending agencies a Request for Proposal (RFP), then requiring them to bid on the work to win it and, thus, fixing the cost basis for the project before either party really understands its requirements. This approach transfers the majority of the risk to what is often the more vulnerable business entity, the agency.

“As Yury has pointed out, agencies typically deal with this risk by developing rigid, standardized processes with numerous deliverables and checkpoints in an attempt to achieve greater control and minimize risk across all of their projects. But Yury is right—doing so creates a disconnect between agencies and product companies for all of the reasons he’s highlighted. Their differing approaches to project work are incompatible. But changing this situation will require change on the part of both agencies and product companies.

“As a UX consultant, I’ve always engaged with clients in the way that Yury describes in-house teams’ collaborating together. I’ve never responded to an RFP. The RFP process seems designed to waste a lot of people’s time, and I just don’t work that way. In the Forbes article ‘Why the RFP Is a Waste of Time,’ Avi Dan says, ‘The traditional approach to selecting an agency has been around for almost 50 years and it is completely out of date. … The agency search process is too slow for a … world that functions at the speed of light, and it is too wasteful for companies—and agencies.’ Instead, I prefer to provide a Statement of Work (SOW) that more loosely defines the parameters for a project, lets me quickly get started on a project, and allows me to adapt my work approach to the needs of a client’s specific project as it progresses. Participating in collaborative workshops with a client product team lets me build relationships with them and get a project started on a sound footing.

“Product companies would benefit from being more open to working with UX consultants on an hourly rather than a fixed-cost basis. Doing so would enable UX consultants to function as true members of their product teams—going with the flow as a project’s scope changes and working collaboratively with them throughout the project—rather than as outside resources conducting separate design projects in parallel.

“Particular teams and projects have differing needs for UX consultants. Some UX consultants specialize in particular domains. Others have diverse experience that enables them to synthesize innovative design solutions. The mindsets and work practices of some UX consultants makes them best suited for creating incremental design improvements, while others create design systems, and still others focus on innovation projects.”

“Because independent UX consultants can be more flexible in the way they work with businesses than agencies can, perhaps this changing marketplace signals that it’s time to shift the focus away from those few preeminent UX design agencies that our reader mentioned. Businesses should choose independent consultants who meet their needs for specific projects, fit with their cultures, and can adapt to their ways of working, then develop long-standing relationships with them.”